The Barriers to US Reindustrialization

“America will be a manufacturing nation once again.” This statement from Donald Trump’s inaugural address External link. is an entire agenda, in and of itself. First, it posits that the United States is no longer a manufacturing powerhouse. Next, it suggests that the nation will manage to halt—and even reverse—the last 75 years of globalization. And finally, that factories will flourish on American soil, creating the many products that consumers buy and use. To achieve this goal, Trump is relying on a three-pronged strategy that he’s already begun putting in place: tariffs that are high enough to force reshoring, deregulation that favours manufacturers, and steep cuts to energy prices. But will this be enough? In this Economic Viewpoint, we’ll be looking at the main roadblocks to a US manufacturing renaissance. At first glance, the White House’s strategy seems ill suited to the problem at hand: Trump’s chaotic trade policy will likely harm investment, there may be a skilled labour shortage, and there are many obstacles to providing the energy needed at a low cost. On top of that, sources of financing may be limited. There is a real risk that the policies implemented by the White House won’t bring back manufacturing but could instead undermine the economy.